Montenegro's real estate market is booming due to strong demand

Montenegro's real estate market is thriving due to high demand. According to the Statistical Office (Monstat), the average price of new housing in Montenegro increased by 9.09% by the end of the second quarter of 2023 and amounted to € 1,500 per square meter. However, if we take into account inflation, prices for new buildings increased by only 1.5% compared to the same period last year. The gap between nominal and real indicators is due to an increase in inflation, which reached a record 17.5% in November 2022. Although inflation dropped to 7.9% in September 2023, it is still well above the average level over the past 11 years, which is 1.5%.

Demand for housing continues to recover, especially from foreign buyers. According to the Central Bank of Montenegro, foreign direct investment in real estate increased by 5.41% to €296.81 million in the first eight months of 2023 compared to the same period last year.

There is also an increase in activity in the field of housing construction. The number of permits for housing construction increased by 232.2% in 2022 compared to last year, reaching 2,156 units, and the area of permits increased by 240.4% to 136,558 square meters. In the first half of 2023, the number and area of housing permits increased by another 33.5% and 39.5%, respectively, compared to the same period last year.

Montenegro's real estate market is expected to continue to grow in the medium term due to the recovery of tourism and further economic growth. The country's economy continues to strengthen, albeit at a slower pace. The International Monetary Fund (IMF) forecasts a slowdown in Montenegro's economic growth to 4.5% this year, which is slightly different from the World Bank's forecast of 4.8% growth, but still lower than the 6.1% growth in 2022. The European Commission's forecast assumes that the country's real GDP growth will be 3% this year and 2.9% in 2024.

Real estate prices in resorts also continue to rise. On the Budva Riviera, residential real estate is sold at a price from €1,700 to €3,500 per square meter for apartments, from €3,500 to €6,000 per square meter for luxury apartments and from €3,000 to €10,000 per square meter for houses, cottages and dachas. On the Bar Riviera, prices range from €1400 to €3000 per square meter for apartments and luxury apartments and from €1200 to €3500 per square meter for houses, cottages and villas. In the Bay of Kotor, prices range from €2000 to €3500 per square meter for apartments, from €3500 to €8000 per square meter for luxury apartments, from €2500 to €3000 per square meter for houses and cottages and from €4000 to €7000 per square meter for villas.

Despite the sanctions imposed by Montenegro against Russia, Russians remain the largest investors in real estate in Montenegro. From January to May 2023, Russians invested a total of €52.5 million in this country. Of these, about €28.9 million, or 55%, was spent on the purchase of real estate in the Balkan country.